Bursa Malaysia's Suq Al-Sila'(Commodity Murabahah House) as an Alternative Platform for Tawarruq Transaction

Abstract

In 2009, Bursa Malaysia launched a new trading platform called Suq al-Sila' or Commodity Murabahah House. The platform is introduced to facilitate Islamic financia1 transactions particularly the application of commodity murabahah which is based on the principle of taw'arruq. This platform is claimed to provide genuine commodity transactions where possession and delivery of the commodity can take place without any hindrance, as opposed to the controversial practice of tawarruq using a platform like the London Metal Exchange(LME). This paper aims at discussing the practice of tawarruq using Bursa Malaysia's Commodity Murabahah House. In particular the paper provides comprehensive discussion on the debates over tawarruq which subsequently lead to declaration by OIC Fiqh Academy deeming organized tawarruq as impermissible. This paper concludes that despite the criticisms and some unresolved Sharah matters entangling the practice of tawarruq, the effort made by Bursa Malaysia to introduce a platform such as Commodity Murabahah House is commendable. Furthermore, since the nature of modem organized tawarruq may not strictly comply with Shariah principles, the reasons behind using this facility should be carefully taken into consideration, especially in situations of real urgency and cases of need.